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Wednesday, 10 May 1961

Mr HAROLD HOLT - The decision to increase the interest rate payable on fixed deposits lodged with trading banks was one of the series of measures which the Government adopted towards the end of last year to bring the boom situation under restraint. This decision has had very valuable results during the months that have intervened since it was made. I am glad that the honorable member has raised this question, because he has given me an opportunity to present the picture in rather better balance than that in which it has previously been viewed by most people during recent months. It is the practice of the press to publish periodically figures showing movements in savings bank deposits, and since our measures were introduced there has been a decline, month by month, in the level of savings bank deposits. On the other hand, there has been a very substantial increase in the amount of fixed deposits with the trading banks. The figures showing this increase are rarely published, and certainly they are very rarely published alongside the figures showing the decline in savings bank deposits. From the end of October last until the end of March there was a decline of £29,000,000 in the total of saving bank deposits, but a rise of £81,600,000 in the level of fixed deposits with trading banks. Undoubtedly portion of the increase in fixed deposits with trading banks represented former savings bank deposits which were withdrawn and paid into the trading banks in order to take advantage of the higher rates of interest available from those institutions.

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